Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/58902
Authors: 
Doerrenberg, Philipp
Duncan, Denvil
Fuest, Clemens
Peichl, Andreas
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6275
Abstract: 
This paper is the first to provide evidence of efficient taxation of groups with heterogeneous levels of 'tax morale'. We set up an optimal income tax model where high tax morale implies a high subjective cost of evading taxes. The model predicts that 'nice guys finish last': groups with higher tax morale will be taxed more heavily, simply because taxing them is less costly. Based on unique cross-country micro data and an IV approach to rule out reverse causality, we find empirical support for this hypothesis. Income groups with high tax morale systematically face higher average and marginal tax rates.
Subjects: 
tax morale
tax compliance
optimal taxation
political economy
JEL: 
H2
H3
D7
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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